posted by simfin on 03/04/2005 10:20:11
I also agree about the 5 years loan if you are to keep the car for that period. If however, you know that some extra funds may become available soon then it may a good way of getting a low monthly payment to begin with.
I personally have got mine on a five year loan, but have effectively got the full cost of the car paid for by my company (gone private instead of company car). This means that I can have a few grand in the bank, working off the interest of my mortgage, while keeping a low monthly payment. Works for me, but not everyone get's a monthly co-car allowance of course.
A 5 year loan should not be dismissed, as if you get a 5.7% interest rate over 5 years, then the interest paid in total is not that much, when compared to the overall cost of running cars.
One question I would ask of the original poster is - Have you also checked your insurance premium ?(not wishing to be rude), but check the full yearly premium, not the cost to change from current car for the remaining period. Obviously I am not aware of your age etc, but it may be worth bearing in mind.
Thanks for your helpful comments folks on this thorny issue. I hope i can answer some of your more pertinent points..
1) I am 32, already drive a MK IV GTi,and yes, i have discovered how much more per month the insurance will be, about ?20.00 per month more.
2) With reference to someone's point on depreciation, running costs, etc, i of course acknowledge that the GTi will depreciate in value, that taken as 'read', but would like to think that even after 5 years, that i could still get ?6-8 k back. I shall be paying about c.?25.00 per month to VW to cover 'Servicing, Maintenance, and Tyres' so i hope this will alleviate any additional costs over the 5years. I've already covered fuel, tax + insurance with the fact that i already know these first-hand as i already own a Mk IV GTi.
3) I shall be stumping up about ?5 k up front, so no, the loan is not to cover the full amount. Yes, i am part-exchanging my wife's V reg Susuki Swift and getting ?1000.00 for that. We're also in the process of selling my Mk IV, so my wife can purchase let's say a more female type car, which will of course save us a hell of a lot there.
Sure, i could stump up more cash if i wanted to and lower the amount to borrow, but 'rainy day and all that'. I shouldn't need to anyway, i know i can well afford the repayments, but would rather keep my savings where they are..
Thanks everyone for your responses; for a moment there, some of you nearly convinced me not to go ahead with this purchase, but to those who have given me encouragement, thank you. You only live once, about time i bought a new car, why else do some of us work our bums off each day. Helps i suppose when your spouse is a Supply Teacher and earns a small fortune..[